The California Foreclosure Prevention Act was introduced in an attempt to slow the torrent of foreclosures flooding the state – and with many more to come – and to allow extra time for lenders and borrowers to agree on loan modification terms.

Realistically, nobody expected it to make much of a dent in the number of foreclosures, given that so many people simply can’t pay the mortgage owing to California’s  escalating unemployment and poor economy, not to mention the huge price drops that have put them a long way under water.

However, it was hoped that the California Foreclosure Prevention Act would at least force mortgage companies to make more of an effort to modify loan conditions for struggling homeowners.

Unfortunately, this hasn’t worked either, since all the big mortgage lenders were granted exemptions from the new law as soon as it went into effect. This essentially renders the law useless and leaves most distressed borrowers no better off, as the exempt lenders account for over 90% of properties presently under threat of foreclosure in the Golden State.

Federal government efforts to help those facing foreclosure – such as the Making Home Affordable program and the HOPE hotline on 888-995-HOPE or www.hopenow.com – can benefit some of California’s distressed homeowners. State authorities have also teamed up with Spanish-language TV network Univision to provide information and assistance to Spanish-speaking mortgage-holders. There are also community-based counseling programs across the state.

This would give the lender some cash flow while waiting for the market to rebound, and keep homes occupied and off the market, where they would contribute to delaying the housing price recovery. As the name suggests, the aim is also to keep neighborhoods from deteriorating because of mass foreclosures, as well as to remove the need for families to look for alternative accommodation.

Even if the Neighborhood Preservation Act does become law, we still don’t know how many lending institutions would actually make use of this facility.

It has been suggested that this legislation should be accompanied by a law that gives homeowners the right to remain in their homes as renters. If a renters’ right law of this nature could be enacted quickly, it would help Californians cope with the huge wave of foreclosures expected in the state over the next three years when a million option ARM mortgages reset at sharply higher levels.

Related Articles:

• The California Mortgage Crisis: No End in Sight
• US$18 million Website to Help Americans Recover from the Financial Crisis
• Alternative Options When You’re Facing Foreclosure

Just enter a loan amount or the purchase price of your property and other details such as the interest rate and the term of the loan and press the “Calculate” button.

The calculator will instantly calculate the loan and mortgage repayment requirements in a table and chart your loan visually.

In the example above, we used these loan specifications:

• Loan Amount: $150,000
• Loan Term: 15 Years
• Interest Rate: 5.5%
• First Payment Date: July 2009

Free Mortgage Loan Calculator – To use the free calculator for mortgage loans, click on the “mortgage” tab on the top (next to the “loan” tab). Here’s an example mortgage loan:

• Purchase Price: $250,000
• Down Payment: 10% ($25,000)
• Mortgage Term: 30 years
• Interest Rate: 5.5%
• Property Tax: $3,000 per year
• Property Insurance: $1,500 per year
• PMI: 0.52%
• First Payment Date: July 2009

Now, try this free online calculator for your loans and mortgages yourself and feel free to share any comments below.

In fact, the money is actually being spent on a website redesign as there’s already an existing “website to foster greater accountability and transparency” in the use of funds covered by the American Recovery and Reinvestment Act of 2009 at www.Recovery.Gov.

So, why do we need a multi-million dollar site to report on how much money the government is spending, especially as we’ve already got one?

In an announcement from the General Services Administration, officials mentioned that the new site will allow “taxpayers to see where their dollars are being spent” but failed to reveal pertinent details about the deal where apparently only 59 companies were eligible to bid for the contract.

Although the Recovery.Gov site is supposed to create greater transparency, the management of its own redesign has certainly been surrounded by secrecy and too many unanswered questions.

As for accountability, it’ll be interesting to see how anyone justifies spending US$18million on a website upgrade.

UPDATE:

As it turns out, the contract’s price tag may be quite understandable if we take a closer look at the details:

1. The current cost of the redesign is only US$9.5 million. US$18 million is the total value of the contract including the possibility of an extension through to 2014.
2. US$9.5 million is still an enormous sum to develop a website when you consider that the technology licensing cost for UsaSpending.Gov (a larger site which tracks the entire Federal Budget) was only US$600,000. Using this as a reference, it may be reasonable to assume that a fair value for the project may fall in the region of US$2 to 3 million.
3. Further investigation reveals that there is a very tight deadline on the project, where the contractor has less than 60 days to deliver a finished product. OMB Watch explains that this could be a major reason for the high cost.

In view of the expedited timeline, the premium included in the project cost may be more understandable, even if it’s still unacceptable.

This means that the house or apartment will no longer be yours, and you will be evicted!

If you act quickly, however, there are a number of steps you can take to help prevent this from happening.

Keep in mind that mortgage companies don’t actually want to take over people’s properties – they would much rather see borrowers stay in their homes – and are often willing to work out a deal, at least temporarily.

Here are 10 Tips on How you can avoid foreclosure:

1. Contact your mortgage company if you can’t pay: It is very important that you call your lender as soon as your personal financial crisis gets so bad that you’re looking at missing a mortgage payment. The earlier you do this, the better.
2. Get impartial, free advice: The Homeownership Preservation Foundation (call them on 1-888-995-HOPE) can also advise you about how to talk to your lender and what your options are. Alternatively, you can get help and advice from the Department of Housing and Urban Development (HUD). Find a HUD-approved housing counselor near you or call 1-800-569-4287.
3. Open and respond to any mail from the lender: Early on in the process they will send you advice on how to avoid foreclosure and hold on to your home. If the problem escalates, you will receive letters about impending legal action and court appearances. If you respond promptly and take the action suggested, the lender will be more inclined to see you as an honest and co-operative customer.
4. Stay in your home: If you move out you might not qualify for assistance, so it’s best to stay put while the problems are being sorted out.
5. Be aware of your mortgage rights and obligations: Study your mortgage papers to see how your loan issuer is entitled to act if you miss any monthly payments. You should also find out about the foreclosure laws and procedures that apply in the state where you live.
6. Understand your options: Depending on your situation and your lender, there may be a number of options available to you. For instance, the mortgage company could offer you a repayment plan or a modification of the loan terms, or if that doesn’t work they might agree to a short sale or a deed-in-lieu. For more details see Your Options When You’re Facing Foreclosure.
7. Watch your spending: Along with healthcare, keeping your home should be your top priority. In other words, you need to get used to spending less on other things like entertainment, cable TV, memberships and eating out in order to avoid being made homeless. Also, don’t forget that paying your mortgage is more important than your credit card and other unsecured debts that are cancelled if you go bankrupt.
8. Cash in your assets: Do you have stocks, jewelry, a car or other assets you can sell? Clean out your house and have a garage sale or sell some things on eBay to raise cash. Get a second job to bring in a bit more. Even if you don’t raise enough to get out of trouble, it shows the lender you are trying.
9. Don’t pay for foreclosure prevention: You need every penny to pay the mortgage with, so don’t deal with companies that promise to negotiate with your lender and charge you hefty fees. You can deal directly with the bank or mortgage company, or speak to a HUD approved housing counselor.
10. Beware of foreclosure recovery scams: There are companies that say they can act on your behalf to stop your foreclosure. Be very wary, as this often means you have to sign over the property title to the company and then pay them rent every month in order to stay in your home. In other words, you lose the house or apartment anyway! Never sign any legal documents without consulting an attorney or a reputable real estate professional with experience in this area.

If you really can’t stop heading for a foreclosure, make sure you are aware of the potential alternatives to foreclosing.

One of the least painful ways of doing this is to cut back on your use of household energy and water. As an added bonus, you will be doing the environment a favor at the same time.

So, what exactly can you do to save money on your utility bills?

There are a lot of different money-saving methods you can use that are incredibly simple and won’t cost you anything – it’s just a question of being aware of them and remembering to use them.

Other helpful measures will require a one-time investment that you can then recoup over and over in years to come.

16 Tips to Lower Your Energy Bills

Here’s a list of 16 money saving tips on how you can reduce your electricity, gas and energy bills. Try some of these techniques as part of your overall personal financial management plan, and watch your utility bills shrink from month to month:

1. Turn the heat down a few degrees and put on a sweater instead. Likewise, if you use an air conditioner in the summer, put the temperature up a few degrees until you start to feel too hot.
2. With a programmable thermostat on your heating system you can set the temperature a bit lower at night when everyone is tucked up in bed. Program the heater to kick into gear early in the morning so the house is comfortable when you get up. If nobody is home during the day, use the timer to save energy and then ensure that you come home to a warm house.
3. Use ceiling fans together with heaters or air conditioners to circulate the warmed or cooled air and save money. The fans are relatively cheap to run.
4. Don’t heat or cool rooms you seldom use, such as the guest bedroom. Keep the doors between rooms shut so the warm or cool air doesn’t escape.
5. Your furnace and air conditioners will work a lot more efficiently – and use less power – if you clean the filters frequently. You should also have them professionally serviced regularly.
6. If you are renovating or building a new house, put proper insulation in the walls and attic to help keep the place warm in winter and cool in the warmer months.
7. If there are gaps around windows and doors, use adhesive insulating foam strips for a snug fit.
8. It takes a lot of energy to heat water, whether you use electricity or gas. Reduce the temperature on your water heater and see the savings add up.
9. Many electrical appliances consume a lot of power even when they are not switched on, if you leave them plugged in. A recent UC Berkeley survey found that idle appliances account for six to 26 percent of household power bills. Get into the habit of unplugging appliances or using a power strip with a central on/off switch for convenience. Some electrical items are particularly big power drains – among them are TVs, microwaves, computers, modems, DVD players, cable and satellite boxes, and game consoles.
10. Use energy-saving light bulbs, which use only a quarter of the power compared with regular bulbs. Sure, they cost more to buy but they last for several years.
11. Switch off the lights when you leave the room unless you are planning to return shortly.
12. Solar powered outdoor lights cost nothing at all to run, and are also a good security measure in your front and back yard, as well as in doorways and by the garage.
13. Regular electric or gas ovens use a lot of energy if you are cooking for a long time. If you use the microwave instead you will save money as well as time.
14. Air dry your laundry instead of using the dryer all the time. Hang your washing outside on a warm day for that fresh, sunny smell!
15. Always make sure the filter on your dryer is free of lint before you start it up. This will make a huge difference to drying time and energy consumption alike.
16. When purchasing new appliances, look for energy-saving models and read reviews of comparable items before deciding which one to get. Old refrigerators, for example, use a lot more power than newer, low-energy models, and can be worth replacing even if they are still working OK.

13 Tips to Lower Your Water Consumption

You can save plenty of money by being careful with your consumption of water, which is becoming an ever more scarce and expensive commodity.

If you live in an area that has a water shortage, you will already be familiar with some of these tips:

1. Shower instead of taking a bath, and make it a short one. Outsized and multiple shower heads have been popular for some years, but many people are saving water and cash by returning to normal-size, less powerful shower heads now.
2. While you are waiting for the shower to run hot, use a bucket to collect the cold water. You can then use this to flush the toilet.
3. Similarly, you should put a pitcher under the tap in the kitchen sink when you are waiting for hot water to appear. Use that water for plants or pets, or to make coffee or put in the refrigerator.
4. Don’t keep the water running while you are brushing your teeth – this is a huge waste. Turn the faucet on again when you need to rinse or, better yet, fill a glass and use that to rinse your brush as well as your mouth.
5. When you are washing dishes, don’t rinse them under running water. Instead, fill the second sink or a plastic basin with clean water and change it when necessary.
6. Fix leaking toilets, pipes and faucets immediately. Check the kitchen, laundry and bathrooms for leaks and drips regularly, and you will save money that would otherwise literally disappear down the drain.
7. Replace old toilets with modern, low-flush models that use a lot less water.
8. Don’t do less than a full load of laundry – this will save both water and electricity. Also, avoid washing items that don’t really need it. You might be able to wear a piece of clothing more than once before putting it in the washer.
9. For the same reasons, you should only run the dishwasher when it is full, and only put in dishes that are actually dirty.
10. Wash your car or motorcycle with a bucket of water, not a hosepipe, and you will save a gallons of water each time.
11. Watering your plants and lawn with a watering can or a low-flow hose nozzle conserves a lot of water too.
12. Get a water butt or barrel and place it under a drainpipe to collect the runoff from the roof. Use the water for plants, pets and car washing.
13. If you have a pool or hot tub, keep it covered if possible when you are not using it. This helps prevent the water from evaporating and needing to be replaced.

If you actively practice these 29 tips on how to save money by lowering your utility bills, it will definitely help your personal finances especially if you’re in a financial crisis.

The number of foreclosures is at a record high, and looks set to balloon over the next few years.

If you’re in danger of having your home repossessed, the good news is that mortgage lenders are generally quite keen to negotiate a deal to allow you to keep it.

However, you do need to demonstrate that you are willing to work with them.

What Happens During a Foreclosure?

If your home is foreclosed, you will lose all rights to it no matter how much money you have put in to the mortgage, and you will have to move out.

The foreclosure will show up on your credit report for 7 years, and you might not be able to get any type of loan during that time. In addition, your credit score will take a hit.

In cases where the lender sells your foreclosed property for less than you owed them, they are permitted to take out a deficiency judgment against you. This means you have to pay them the difference, even though you’re no longer the owner.

The only state where you can’t be pursued for the balance of the loan is California – and that applies only where the mortgage has not been refinanced.

So, what are the Alternatives to Foreclosure?

1. Special Forbearance

Your mortgage issuer might be willing to set up a repayment plan to help you catch up with missed payments. This could even include a temporary lowering of your monthly mortgage bill, for instance if you have recently become unemployed. Of course, your lender will need to be convinced of your ability to stick to the new payment schedule.

2. Mortgage Modification

Another way to reduce your monthly payments is to ask the lender about refinancing your mortgage at a lower interest rate (contingent on market conditions) and/or extending the term of the loan. You might qualify if you’re getting back on your feet financially, but are earning less than before you defaulted on the mortgage. This arrangement could be either temporary or permanent. Check your mortgage documents first, though, to ensure that there is no penalty for paying off the initial loan early and refinancing.

3. “Hard money” Refinancing

If you’re fortunate enough to have a good amount of equity in your home (it’s worth a lot more than you owe), you could apply for a “hard money” cash loan secured against the property. This would give you a lump sum to pay for the months you’ve missed. The effect of a high interest rate is negligible since you are borrowing a relatively small sum compared with a complete refinancing loan.

4. Fannie Mae HomeSaver Advance™

Ask your lender if your mortgage is owned by Fannie Mae. If it is, you might qualify for an unsecured personal loan that will enable you to make up for delinquent payments.

5. Partial Claim

Your lender might be able to apply for a partial claim on your mortgage from the Department of Housing and Urban Development (HUD). If so, HUD would make a payment to the lender to get your mortgage up to date. HUD would also grant you an interest-free loan that you would pay back over an agreed period. To qualify, you must be at least 4 months, but no more than 12 months, behind. Also, your mortgage must not be in foreclosure.

6. Pre-foreclosure sale (short sale)

This means that you sell the house or apartment for less than the value of the mortgage, with the agreement of your lender. In some cases lenders are willing to take a loss, and to release you from your obligation to pay the loan balance, in order to get the mortgage off their books and not have to foreclose and be saddled with the property. This would preserve your credit rating, but remember that you would have to find somewhere else to live.

You might qualify if the appraised property value is at least 70% of what you owe, and the property sells for at least 95% of the appraisal. You also have to sell the home within 3 to 5 months (depending on the lender’s stipulations), and to have missed at least 2 months’ payments by the sale closing date.

7. Deed-in-lieu of Foreclosure

If it’s taking a long time to resolve your mortgage default, it’s possible that your lender will allow you to “give back” the property and walk away. This way, you avoid the hassle, stigma and credit issues associated with foreclosure, but you do still lose your home. Lenders generally see this as a last resort, though, since they would really rather avoid having to become property owners.

Most mortgage lenders would prefer to conduct a short sale in this situation, particularly if they believe they could go after you to cover any shortfall. Even so, you might be able to hand over a deed-in-lieu if all other options have failed, you have tried to sell without success, and you don’t have any other mortgage in default.

8. Walk Away

As the mortgage crisis continues to escalate, an increasing number of people are becoming so desperate that they are simply abandoning their homes, suspending their payments and mailing the keys back to their lenders (known these days as “jingle mail”).

This is definitely not a good idea. Your lender will most likely foreclose on you, your credit report and credit score will suffer, and you will not get another mortgage for the next 7 years. You might also find yourself facing a deficiency judgment, where you have to compensate the lender if they sell your home for less than the mortgage (this doesn’t usually apply in California).

If you’re lucky, you might be offered the chance to sign over the property with a deed-in-lieu, but there is no guarantee of this. Another important point is that you need to remain at your address to qualify for mortgage assistance, refinancing or repayment plans – so don’t burn all your bridges by walking away!

If losing your home has become inevitable, it is really better to try to reach an agreement with your lender to avoid any nasty surprises that could make a bad situation even worse.

Here are 13 personal finance tips that will help you to manage your finances and keep your head above water until you can return to the workforce:

1. Find out about Severance
2. Apply for Unemployment Benefits
3. Stay Insured
4. Track your Spending
5. Prioritize your Bills
6. Cut Unnecessary Spending
7. Try Not to use Credit Cards
8. Leave your Retirement Funds alone
9. Be Careful about using your Home Equity
10. Raise Cash
11. Take a Temporary Job, or Freelance
12. Consider Volunteering
13. Identify sources of Emergency Aid

1. Find out about Severance

Ask your former manager or HR department whether you are eligible for severance pay. You might also want to find out what the rules are in your state, to make sure you actually get what you are entitled to. Don’t forget that you could be owed accrued vacation, overtime, sick pay, pension benefits or unemployment insurance as well. Some firms provide job search assistance to laid-off workers – you should ask about that too.

2. Apply for Unemployment Benefits

Do this as early as possible as there is always a waiting period before you start getting your checks. Receiving unemployment will not affect your credit, nor should you be worried that it’s ‘welfare’. It’s not – your employer paid into the system for you while you were working, so you’re entitled to use it. You can normally claim for up to 26 weeks, and often longer when the economy is bad. With the average unemployment check at $270, it probably won’t replace your previous income, though. Your state’s employment office can tell you how to apply and how much you’re likely to get.

3. Stay Insured

You can usually buy continued health coverage under your former employer’s plan, although this can be expensive. You don’t need to do this right away, though, as you have 60 days to decide whether to take up so-called COBRA coverage. However, a high-deductible individual policy might suit your budget better while you’re out of work.

4. Track your Spending

When money is tighter than usual, you need to know what’s happening to every penny. Keep a record of everything you spend, either with a notebook and pen, or using a simple spreadsheet, personal finance software like Quicken or Money, or an online site such as Quicken Online, Mint, or Geezeo.

5. Prioritize your Bills

Once you know where your money is going, you can decide which bills and other regular outgoings are essential, and which you can cut out or hold off on paying. List all your expenditures in order of importance. At the top of the list should be your rent or mortgage payment, essential utilities like electricity and water, and transportation you need to get to job interviews (car payment and insurance, or public transit). Near the bottom you should have unsecured debts like student loans, credit cards and other personal debt you use to pay for things that can’t be repossessed.

Your list should remind you what your priorities really are, if things get so bad that you need to choose which bills to pay. If you don’t pay your credit card bill, your credit score will suffer and you might have to deal with some phone calls from the issuer, but not paying your mortgage or rent could mean losing your home.

In the event that you can’t pay an essential bill like the electricity or the mortgage, get in touch with your power company or lender before it falls due. Utility providers often have low-cost services for those with low incomes. You might also qualify for temporarily reduced payments on your mortgage or other loans, but it is important that you notify the lender of your situation rather than simply default on your payments. In many cases, you can defer your student loan repayments while you’re unemployed too.

6. Cut Unnecessary Spending

When you have a lot less money coming in, you have to adjust your spending habits as well. You simply can’t spend money on anything that is not strictly necessary, especially as you don’t know how long you will have to live without a real income.

There are many ways you can trim your spending, for example: invite friends to your house or to a picnic in the park instead of meeting them in a restaurant or bar; stop buying clothes other than those you need for job interviews; use Skype for long-distance calls; get several errands done in one car trip to save gas money; buy generic groceries instead of branded; adjust the thermostat on your heating/cooling system; clean your car yourself rather than go to the car wash.

7. Try Not to use Credit Cards

Charging purchases to your credit cards gets expensive if you have an outstanding balance. Try to avoid putting any more items on your cards for the moment. You should also attempt to lower the cost of paying off what you owe by negotiating a lower interest rate with your card issuer, or shopping around for a card offering a better rate for balance transfers. Here are some great tips on how to stop using your credit card.

8. Leave your Retirement Funds alone

Don’t be tempted to ransack your 401(k) or IRA to get through this rough patch. You will be stung for taxes and penalties now, plus you will lose the tax-deferred returns you could have made. If you have 30 years to retirement, and assuming 8% annual growth, taking out $10,000 now means $109,000 less when you retire. Retirement funds are protected in bankruptcy court, so they should never be used to pay your credit card debt, which is wiped clean if you go bankrupt.

9. Be Careful about using your Home Equity

When you have a job, a home equity line of credit can be a useful fallback, as long as you use it for real emergencies only. If your financial situation is uncertain – for example when you’re unemployed – you must avoid using home equity to pay unsecured debts since home equity is also protected in bankruptcy court.

10. Raise Cash

Now that you have plenty of free time, use it to clean up your house and hold a garage sale or sell your old stuff on Craigslist or eBay. Maybe you have a room you can rent out. Think about your skills and how you can use them to do casual work like dog walking, house sitting, yard work, home maintenance, tutoring, editing etc., to bring in a bit of money until you find permanent work.

11. Take a Temporary Job, or Freelance

If it’s taking some time to find a job, consider applying for a temporary position, even if it seems like a step down from your usual job. Depending on your profession, there might also be opportunities for freelance work. Keep your options open, and you will have a greater chance of finding gainful employment – and you might even enjoy it!

12. Consider Volunteering

Why on earth would you want to work for nothing when you don’t have an income? Because it can give you a sense of purpose and routine, and show you that there are people whose situation is worse than yours. Don’t forget that it can also be good for contacts, and might even lead to a job somewhere.

13. Identify sources of Emergency Aid

If you’re out of work for a long time, you should find out how to qualify for food stamps or other government aid. Contact the food banks in your area and ask if you can join. Your church might have emergency funds for people experiencing financial hardship, and your family and friends might be able to help too.

The interest just keeps piling up, and the amount they owe never seems to get any smaller. Does this sound like you?

If so, you need to pull yourself out of this vicious cycle of spending and mounting debt right now. Remember, there’s nothing “normal” about sinking deeper and deeper into debt. You probably know perfectly well that you have to stop using your credit cards before it’s too late. But let’s face it, that’s easier said than done – right?

It’s time to get tough with yourself and take some drastic action to clean up your act when it comes to personal financial management. So, what are your options?

1. Close your accounts
2. Cut up your cards
3. Make it hard to get at your cards
4. Get an accountability partner

1. Close your accounts

This might seem like the obvious solution, since it will definitely prevent you from using your cards. However, it is often not such a good idea. For one thing, you might need a credit card for emergencies, or to show when you are traveling and need to book flights, hire cars and hotel rooms.

You should also bear in mind that with some credit cards, the cardholder agreement states that the issuer can demand faster repayment if you close your account while you still owe money. Always check the fine print! Another important consideration is that each time you terminate a credit card account you lower your FICO score, or credit score. You never know when you will want to apply for a new credit card, auto loan or mortgage in the future, so make sure you keep your credit score as high as possible.

2. Cut up your cards

While this might work for some people, anyone who has ever shopped online knows that you don’t actually need a card, just your card number. So unless you have exceptionally strong willpower, cutting your cards in half is unlikely to stop you from spending when you are logged on to your favorite shopping sites. Also, you won’t be able to use your cards when you are traveling and need to hand over your plastic.

3. Make it hard to get at your cards

Some people think they can stop themselves from using their credit cards by freezing them in blocks of ice, burying them in the backyard or locking them in the safe. If this helps you kick your spending habit – great! For most of us, these methods just don’t work, though, since you can so easily carry on charging purchases to your accounts. And if you get really desperate to hit the mall, you can always dig up your cards, thaw them out, or whatever!

4. Get an accountability partner

What is an accountability partner? This is a close friend or relative whom you trust (more than you trust yourself, in this case) to help you control your credit card use. This person is meant to be a true friend and exercise some tough love any time you “slip” and try to make a purchase that isn’t absolutely necessary. So it’s a good idea to pick a person who is close enough to you that they feel comfortable giving it to you straight, and can be as strict as they need. Of course, it’s also best if your accountability partner is someone who manages their own finances sensibly and has no history of credit card abuse themselves.

Reduce Credit Card Debt

You may or may not want to close some of your credit card accounts (bearing in mind that your credit score will suffer). You should probably cut up your cards, however, leaving just one or two intact. Give these cards to your accountability partner and instruct them to only give them back to you if you can prove that you need a credit card because you are traveling, or if there is a real emergency. Since you will have to ask for the card and justify why you need it, you will likely not try to get it unless there is a good reason.

Of course, you would technically still be able to make sneak purchases online. However, there are steps you can take to make it more difficult, or at least more embarrassing when you do. A lot of credit card issuers can send email alerts whenever your card is used. So, you should arrange for your accountability partner to receive an email any time you make a purchase – and for them to call you to demand an explanation. Hopefully this will make you think twice before “cheating” and falling even further into bad habits. You can also do this even if you don’t give them your cards.

It can be hard to find the willpower to stop using your credit cards when you don’t have anyone keeping an eye on you. For most people, having a buddy to keep them in line is the best way to solve their personal financial management problems.

• How to Manage Payday Loans
• Personal Finance Articles
• Financial Websites

A payday loan is not difficult to get if you are 18 or over, a U.S. citizen and have a bank account and a job or other source of income.

It is a legal, tightly-regulated way to raise a bit of cash to help you manage a short-term financial crisis. But how do you know if it is really suitable for you?Of course you must be sure that you will be able to pay your loan back quickly to avoid racking up multiple fees. You have to be willing to manage your loan responsibly, and sufficiently disciplined to know the difference between a true emergency that justifies taking on a payday loan and a situation where it would simply be nice to have some extra money to spend.

For some people, a payday loan is actually the only financial lifeline they have access to. The traditional customer is a low-paid worker who lives from one paycheck to the next and sometimes simply cannot make ends meet. As everything gets more expensive and jobs are lost, a lot of middle class people are now facing economic problems and are also turning to payday loans.

Advantages of Payday Loans

In this economic crisis, millions have seen their credit scores take a tumble because they have missed payments on their credit cards, mortgages or other loans, or have had to declare bankruptcy or lose their homes. One advantage with payday loans is that although some loan issuers check credit ratings of applicants who ask for over $500, many do not. So if you are turned down by one lender because of your credit history, you should have no trouble finding another one that will grant you a loan.

Even if you do have a credit card or an overdraft facility on your bank account, there are certain situations where it can work out cheaper to get a payday loan for a couple of weeks. For example, when you are looking at being unable to make your monthly credit card payment on time, you should consider a payday loan. With a typical fee of $15 per $100, a $200 payday loan will cost you $30 per two week term. If you are late paying your credit card bill, you will be charged a flat penalty of $30-40 plus interest on the outstanding balance. On top of that – and this is very important – your credit score will be affected.

For that reason alone, you should consider a payday loan even if you have to borrow so much that the fees add up to more than what you would pay the credit card company, given that a payday loan doesn’t have any negative impact on your credit rating.

If you are facing the prospect of having to bounce checks until you next get paid, or even if you have an overdraft facility, it is very likely that a payday loan would be a far better option. Whether or not your bank covers your checks and withdrawals while you are waiting for your salary, the bank charges will soon mount up.

An Example

Let’s take an example where you write three checks and make one ATM withdrawal, making a total overdraft of $200. For each uncovered check you could be charged a $25-35 NSF (non-sufficient funds) fee, plus another $25-35 per overdrawn item if the bank honors your checks and cash withdrawals. So, your $200 overdraft would set you back $175-245 (3 x $25-35 in NSF fees, plus 4 x $25-35 for the overdrafts), even if you replenish your account the next day. Don’t forget that if you write bad checks to businesses they can charge you additional penalties or even take you to small-claims court. Plus, your credit rating will be damaged, which will increase your borrowing costs in the future.

If you are at risk of having your utilities disconnected you will probably see the advantage of getting a payday loan too, as long as you have the means to pay it back quickly. If your payment is late, there is bound to be a penalty, and if you do get cut off you will have to pay to have your service restored as well.

The table below shows a comparison between a $100 payday loan and some other instances where there is a $100 liability (all on a two-week basis), together with possible fees and their respective APRs (annualized percentage rates). It is clear from this list that a carefully managed payday loan can be a very attractive alternative to incurring other charges when you are unable to meet your usual financial obligations.

• $100 payday loan with $15 fee = 391% APR
• $100 bounced check with $60 NSF & overdraft fees = 1564% APR
• $100 credit card balance with $35 late fee = 913% APR
• $100 utility bill with $50 late and/or reconnect charge = 1304% APR

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In the current economic situation, many people are facing difficult choices about how to get out from under mounting debt. One of these is declaring bankruptcy.

However, unlike when General Motors declares bankruptcy, the private citizen is not going to be bailed out by the government, so it is important to understand the issue thoroughly in order to find a solution to your financial crisis.

Bankruptcy may be a viable option for some borrowers who are in severe debt but in a lot of cases, it is possible to avoid bankruptcy by getting good debt counseling advice from a financial advisor.

What is Bankruptcy?

First of all, as intimidating as it may sound, bankruptcy is actually a form of a plan. It is a strategy for people or businesses that have accumulated more debts than they can repay. They can either agree on an arrangement to repay the money or to cancel their debts completely.

There are two types of personal bankruptcy:

1. Chapter 7 is the most drastic form of bankruptcy. This is a liquidation proceeding in which the debtor’s assets are sold and the proceeds are distributed to the person’s creditors.
2. Under Chapter 13 bankruptcy, the debtor undertakes to repay some or all of the money according to a payment schedule.

The advantage of Chapter 13 is that the debtor is given a fresh start, while being able to keep his or her car and home, and avoiding lawsuits.

Avoiding Bankruptcy

Perhaps the first step in avoiding having to choose which type of bankruptcy to file is to arrange a debt consolidation loan under a Debt Management Plan (DMP).

This would let you reorganize your finances while retaining your credit rating.

Additionally, your creditors may be willing to settle for less than you owe due to your regular monthly payments, which are usually completed within five years.

If your financial crisis is only of a temporary nature, you can avoid bankruptcy by getting a short term emergency loan to cover you until your income is able to sustain your loan payment obligations.

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